MAX’S Group Inc., the country’s largest casual dining-chain operator, expects fewer store closures this year as its consolidation efforts following its acquisition of the Pancake House restaurant chain from the Lorenzo family winds down.
The closure of nonprofitable stores will be followed by the opening of new ones for the remaining part of 2015, the group said.
The company said store closures will still be at the company’s horizon since that is a normal occurrence in its business. It said, however, that it will not be as tough as last year when it had to close down dozens of stores as it consolidated its operations with Pancake House.
Max’s, which is known for its homegrown-restaurant brand of the same name, said the company will open between 80 and 90 stores across all of its brands which now include the group of Pancake House Inc.
The company said it will spend some P550 million for the venture.
The level of store openings, it said, will outpace that of its closures.
“So for next year we already have some in mind and it’s still evolving because our expansion is dependent on available space and proper location,” said Dave Fuentebella, the company’s chief finance officer.
Last year as the company integrated its operations, it had to close down as many as 33 stores across all of its brands. The closures included four each of Pancake House and Max’s Restaurants, six Teriyaki Boys and four Dencio’s. The level of closures spilled over during the first quarter of the year, which it had to close down two each for Pancake House and Teriyaki Boy and one each for Max’s Restaurant, Sizzlin’ Steak and Dencio’s. Max’s said it is keeping all of its options open, which include talks with international brands.
“Right now, we are just keeping our eyes open. If it increases our shareholder value, we will definitely take a look at it. if it’s significant, then it’s something to look at. If not, we’re not going to waste our time looking for potential partners, potential brands or other expansion plans,” said Robert Trota, the company’s president and CEO.
Max’s said for the first quarter of the year, its operations turned around to a net income of P140.2 million (pro-forma) during the period from the pro-forma income of P23.8 million last year.
The pro-forma figures assumed that the two companies’ operations were combined. Max’s only secured regulatory approval to combine with Pancake House, which it bought from the Lorenzo family, started in late 2013 to November last year.
“We are now seeing the results of our transformative efforts in 2014. As we continue to rationalize operations across our stable of brands, we are determined to gain more ground and sustain this momentum moving forward,” Trota said. Store sales, which comprised the bulk of revenues, grew 6 percent to P2.05 billion year-on-year. Franchise income went up 40 percent to P91.93 million from P65.54 million in the same period last year.
(With Rizza Marie Edu)